I think if you had an attorney represent you you need to speak to him immediately. I assume the the township told you the previous owner was sent the certified letter about the septic system. IMHO if the seller DID know about this before the closing and didn't disclose it you may have a case.
Just curious though, does your town require a Certificate of Occupancy inspection? In my town they hold the CO for things like outstanding permits for water heater installation, so I find it hard to believe something so significant as this was overlooked.
In any case speak to an attorney ASAP. This is not legal advise from me but something sounds fishy here.... more